New Delhi, Jan. 20 -- President Trump's escalating tensions with European leaders over his ambitions to take control of Greenland has rattled investors on Tuesday morning, leading to a broad sell-off in US stocks, and government bonds, while also pushing the dollar lower.

The S&P 500 fell around 1.5% as investors reacted to Trump's threat of higher tariffs on various European countries unless they backed his plans for America to take over Greenland. This drop marks the steepest fall of the US stock index since November last year.

The latest threat comes shortly after Trump announced 10% additional tariffs on eight European powers, including Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and Great Britain from Februar...